Summary
United Technologies Corporation (UTC) announced on June 1, 2012, the issuance of $9.8 billion in aggregate principal amount of notes across various maturities and interest rates. This significant debt issuance is primarily intended to partially fund the cash consideration for its then-announced acquisition of Goodrich Corporation. The proceeds will be used to finance a substantial portion of the acquisition, with any remaining funds allocated for general corporate purposes. Importantly, the debt issuance is conditional on the completion of the Goodrich acquisition. Should the acquisition not close by March 25, 2013, or if the merger agreement is terminated, UTC is obligated to redeem all the issued notes at a premium of 101% of the principal amount, plus accrued interest. Following this debt issuance, UTC plans to significantly reduce its existing $15.0 billion bridge loan facility, indicating a strategic shift in financing the acquisition.
Key Highlights
- 1United Technologies Corporation (UTC) issued a total of $9.8 billion in new debt across multiple tranches.
- 2The debt issuance comprises fixed-rate notes with maturities ranging from 2013 to 2042 and floating-rate notes.
- 3The primary purpose of this debt issuance is to partially finance the cash consideration for the acquisition of Goodrich Corporation.
- 4The notes were registered under the Securities Act of 1933 and their terms are detailed in a Prospectus Supplement filed on May 25, 2012.
- 5A mandatory redemption clause is in place: if the Goodrich acquisition does not close by March 25, 2013, or the merger agreement is terminated, UTC must redeem all notes at 101% of principal plus accrued interest.
- 6Following the debt issuance, UTC intends to reduce its $15.0 billion bridge loan facility by approximately $9.7 billion.
- 7The underwriting and issuance involved major financial institutions including Merrill Lynch, HSBC Securities, and J.P. Morgan Securities.